FUNDAMENTALS of MANAGEMENT and Introduction to TQM Francisco S.

Cruz, MD, MPH HPAD 201, Session 5, July 14

Reference: EMER FARAON, MD, MBA DHPA, CPH, UPM

Learning Objectives
Definition and Concept of Management
Four Functions / Elements of Management Overview of the Evolution of Management Thought (Basic Timeline and Categorization) Modern Approaches to Management Introduction to TQM

Management Environment

Managers Organizations Resources

Management Environment
Managers The people responsible for supervising the use of an organizations resources to meet its goals

Management Environment
All managers work in organizations Organizations collections of people who work together and coordinate their actions to achieve a wide variety of goals or desired future outcomes

Management Environment
Resources include people, skills, know-how and experience, machinery, raw materials, computers and IT, patents, financial capital, and loyal customers and employees

GOALS OF BUSINESS OR MANAGEMENT

Business/economics traditionally defined as based on a sole primary motive of self-interest Lead to thinking about profitmaximization as the major goal of enterprise Modified meaning today especially in the healthcare industry
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Is Administration and Management the same?

Administration refers to the activities of the higher level of the management group who identifies the major aims and policies. Administration is a part of management
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FOUR FUNCTIONS
First stated by Henri Fayol (1841-1925)- French CEO Now stated plainly as: 1. Planning 2. Organizing 3. Directing/Leading 4. Controlling
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PLANNING & ORGANIZING

Planning -- Setting firms goals plus the way to accomplish them Organizing -- deciding structure of decision-making What will be done, by whom, for whom

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LEADING & CONTROLLING

Leading/Directing-- Motivating employees to achieve firms objectives

Controlling -Monitoring progress toward goals Taking corrective action

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EVOLUTION OF MANAGEMENT THOUGHT

MAJOR CLASSIFICATION OF MANAGEMENT APPROACHES

CLASSICAL APPROACH
BUREAUCRATIC ADMINISTRATIVE SCIENTIFIC MANAGEMENT MANAGEMENT MANAGEMENT

BEHAVIORAL APPROACH

HAWTHORNE STUDIES

MASLOWS NEED HIERARCHY

THEORY X AND THEORY Y

MANAGEMENT INFORMATION SYSTEM EMERGING APPROACHES

QUANTITATIVE MANAGEMENT OPERATIONS MANAGEMENT APPROACH SCIENCE MODERN APPROACH THE SYSTEMS THEORY
CONTINGENCY THEORY

Classical Approach to Management

There are 3 classical approaches to
management;

1. Scientific Management
2. Administrative Principles

3. Bureaucratic Organization
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Classical Approach to Management

All 3 Classical Approaches share a common assumption;

People at work act in a rational manner that is

primarily driven by economic concerns Workers are expected to rationally consider opportunities made available to them and do whatever necessary to achieve the greatest personal and monetary gain
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Classical Approach to Management

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Scientific Management
Emphasizes careful selection and

training of workers and supervisory support with an emphasis on improving efficiency

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Scientific Management
SM has 4 guiding action principals;

1. Develop rules of motion, standardized work implements, and proper working conditions for every job 2. Carefully select workers with the right abilities for the job
3. Carefully train workers and provide proper incentives

4. Support workers by carefully planning their work and removing obstacles

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Scientific Management
This approach called MOTION STUDY is the science of

reducing a job or task to its basic physical motions,

which eliminating wasted motions, improves performance and productivity
In one study, Taylor reduced the number of motions

used by bricklayers and in turn tripled their

productivity
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MAJOR CLASSIFICATION OF MANAGEMENT APPROACHES

CLASSICAL APPROACH
BUREAUCRATIC ADMINISTRATIVE SCIENTIFIC MANAGEMENT MANAGEMENT MANAGEMENT

BEHAVIORAL APPROACH

HAWTHORNE STUDIES

MASLOWS NEED HIERARCHY

THEORY X AND THEORY Y

MANAGEMENT INFORMATION SYSTEM EMERGING APPROACHES

QUANTITATIVE MANAGEMENT OPERATIONS MANAGEMENT APPROACH SCIENCE MODERN APPROACH THE SYSTEMS THEORY
CONTINGENCY THEORY

Administrative Principles
Fayol developed 14 guiding principles of management, that he felt should be taught to all aspiring managers; 1. DIVISION OF LABOR - specialization of work will result in continuous improvement in skills and methods 2. AUTHORITY - managers and workers need to understand that managers have the right to give orders 3. DISCIPLINE - behavior needs to be grounded in obedience and derived from respect 4. UNITY OF COMMAND - each employee should have one, and only one manager

Administrative Principles
5. UNITY OF DIRECTION - the leader generates a single plan, and all play their part in executing it 6. SUBORDINATION OF INDIVIDUAL INTERESTS - while at work, only work issues should be undertaken or considered 7. REMUNERATION - all should receive fair payment for their work; employees are valuable and not simply an expense 8. CENTRALIZING - decisions are primarily made from the top 9. CONTROL - organizations must have a clear, formal chain of command running from the top to the bottom of the organization

Administrative Principles
10.ORDER - there is a place for everything and all things should be in there place 11.EQUITY - managers should be kind and fair 12.PERSONNEL TENURE - unnecessary turnover is to be avoided, and there should be lifetime employment for good workers 13.INITIATIVE - undertake work with zeal and energy 14.ESPRIT DE CORPS - work to build harmony and cohesion among personnel

Administrative Principles
What can we learn from Fayol? He believed that Management can be taught Management can be seen as a variety of activities or actions that can be worked on in order to improve ones managerial skill set

Administrative Principles
Another contributor to Administrative Principles was MARY

PARKER FOLLETT She displayed a deep understanding of groups and commitment to human cooperation. She believed that

Groups are mechanisms through which individuals can combine their talents for a greater good Organizations are cooperating communities of managers and workers It is the managers job is to help people in the organization cooperate and achieve an 26 integration of interests

Administrative Principles
Folletts perspectives lead to many modern day

applications of her management insights. Follett believed that

Making every employee an owner in the business creates a sense of collective responsibility --Today we talk about profit sharing, gain-sharing, etc. Business problems involve a variety of interrelated factors --- Today we talk about an organization as an open system Company profits relative to public good Today we talk about managerial ethics and social responsibility
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MAJOR CLASSIFICATION OF MANAGEMENT APPROACHES

CLASSICAL APPROACH
BUREAUCRATIC ADMINISTRATIVE SCIENTIFIC MANAGEMENT MANAGEMENT MANAGEMENT

BEHAVIORAL APPROACH

HAWTHORNE STUDIES

MASLOWS NEED HIERARCHY

THEORY X AND THEORY Y

MANAGEMENT INFORMATION SYSTEM EMERGING APPROACHES

QUANTITATIVE MANAGEMENT OPERATIONS MANAGEMENT APPROACH SCIENCE MODERN APPROACH THE SYSTEMS THEORY
CONTINGENCY THEORY

Bureaucratic Organization
Max Weber developed the idea of the Bureaucracy

because he felt that many organizations largely failed to reach their performance potential
A BUREAUCRACY is an ideal, intentionally rational,

and very efficient form of organization, based on

principles of logic, order, and legitimate authority.

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Bureaucratic Organization
Characteristics of Bureaucratic Organizations
CLEAR DIVISION OF LABOR - jobs are well defined, and workers become highly skilled at their job CLEAR HIERARCHY OF AUTHORITY authority and responsibility are well defined for each position, and each position reports to a higher level FORMAL RULES written guidelines direct behavior and decisions in jobs, and written files are kept for historical record IMPERSONALITY rules and procedures are impartially and uniformly applied, with no special treatment CAREERS BASED ON MERIT workers are selected and promoted on ability and performance
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Bureaucratic Organization
The term bureaucracy is now often used with negative connotations Some possible disadvantages of bureaucracy include:
Excessive paperwork or red tape Slowness in handling problems Rigidity in the face of shifting needs Resistance to change Employee apathy (a state of indifference)

Behavioral Approaches to Management

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Behavioral (Human Resource) Approaches to Management

There are 3 behavioral approaches to management;
1. The Hawthorne Studies 2. Maslows Theory of Human Needs

3. McGregors Theory X and Theory Y

All 3 Behavioral Approaches share a common assumption;

People at work are assumed to seek satisfying social relationships, respond to group pressures and search for personal fulfillment
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The Hawthorne Studies

In 1942, the Western Electric Company had a research program conducted to study individual productivity at one of their plants Initial study examined how economic incentives and physical conditions of the workplace affected worker output

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The Hawthorne Studies

Relay Assembly Test-Room Studies Examined the effect of worker fatigue on output Six assembly workers were isolated for intensive study in a special room They were given various rest pauses, workday and workweek lengths, all while measuring productivity However, regardless of the changes made, productivity increased Researchers believe this increased productivity is due to
GROUP ATMOSPHERE workers shared pleasant social relations and wanted to do a good job PARTICIPATIVE SUPERVISION workers were made to feel important, given lots of information and asked their opinion

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The Hawthorne Studies

Lessons Learned

Peoples feelings, attitudes and relations with co-workers affected their work Group influence plays an important role in the decisions made by individuals The HAWTHORNE EFFECT is the tendency of people who are singled out for special attention to perform as expected merely because of the expectations created by the situation Helped contribute to the emergence of the HUMAN RELATIONS movement, which suggests that managers using good human relations will achieve productivity Set the stage for what has now developed into the field of ORGANIZATIONAL BEHAVIOR; the study of individuals and groups in organizations

Abraham Maslow
His theory rested on these assumptions.
Physiological needs; Safety or security needs Belongingness or social needs; Esteem or status needs Self actualization or self-fulfillment needs.

Maslows Need Hierarchy

Self actualization needs

Esteem needs

Social needs Safety needs

Physiological needs

Maslows Theory of Human Needs Maslows theory implies that

managers who help people satisfy

their important needs at work will

achieve productivity
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Douglas Mcgregor
Theory X Most People dislike work Most People must be coerced and threatened before they work. Most people prefer to be directed. They avoid responsibility and have little ambition. Theory Y Work is a natural activity like play. People are capable of self direction and self control People become committed to organizational objectives if they are rewarded in doing so.

McGregors Theory X and Theory Y

McGregor believed that managers should give more attention to the social and self-actualization needs of people at work Called upon managers to shift their view of human nature away from a set of assumptions he called Theory X and toward what he called Theory Y

Chris Argyris
Maturity Immaturity theory

People progress from a stage of immaturity and dependence to a state of maturity and independence. Model I and Model II organization analysis.

1. Model I organization are manipulative 2. Model II organization are open to learning

Quantitative Approach
It includes the application of statistics, optimization models, information models and computer simulations. More specifically, this approach focuses on achieving organizational effectiveness.

Three main branches:

Management Science Operations Management and Management Information Systems.

Management Science
It stresses the use of mathematical
models and statistical methods for decision-making. Another Research. name is the Operations

Operations Management

It

deals

with

the

effective

management of the production process and the timely delivery of an organizations products and services.

Management Information Systems

Management

information

systems focuses on designing

and implementing computerbased information systems for business organizations.

Modern Approaches to Management

Systems Theory
Contingency Theory

Systems Theory
Inputs Resources

Transformation process

Outputs

Labor Materials Capital Machinery Information

Managerial and Technological Abilities Planning Organizing Staffing Leading Controlling Technology

Goods Services Profits and losses Employee satisfaction

Feedback

Contingency Theory
Systems Viewpoint How the parts fit together Individual Group Traditional Organization viewpoint environment What managers do Behavioral Viewpoint Plan How managers influence Organize others Lead Interpersonal Roles Control Informational Roles Decisional Roles Contingency Viewpoint
Managers use of other view points to solve problems External environment Technology Individuals

Contingency Theory There is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation.

Emerging Approaches In Management Thought William Ouchi, outlined new theory called Theory Z. It is the blend of positive aspects of both American and Japanese management styles.

Emerging Approaches In Management Thought

Quality Management is a management approach that directs the efforts of management towards bringing about continuous improvement in product and service quality to achieve higher levels of customer satisfaction and build customer loyalty.

Total Quality Management: An Introduction

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Definition Total Quality Management (TQM) is a management strategy aimed at embedding awareness of quality in all organizational processes.

TQM requires that the company maintain this quality standard in all aspects of its business.

This requires ensuring that things are done right the first time and that defects and waste are eliminated from operations.

Evolution of quality Means & Focus

197 5 1980 2000 1985 1990 1995

Productivity Quality Circle Quality of Work life

Quality

Total Quality

TQC/TQM

Employee Involvement
Self Directed Employees Teams Empowerme nt

Self Directed/Manage d Teams

Innovations

Operation

Customers

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Basic Approach
A committed and involved management to provide long-term top - to - bottom organizational support. An unwavering focus on the customer, both internally and externally. Effective involvement and utilization of the entire work force.

Basic Approach
Continuous improvement of the business and production process. Treating supplier as partners. Establish performance measures for the processes.

TQM FRAMEWORK

Principle of Health Administration Preparing for the Next (6th) Session

Reading Materials for July 21, 2012 Principles and Practices in Health Administration Any reading materials on: ZOPP, Logical Framework Approach/Analysis DOH Department Order 2011-0188 Kalusugan Pangkalahatan DOH LGU Scorecard Any Provincial Investment Plan on Health